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JOINT CIRCULAR No. 13/2005/TTLT/BTC-BLDTBXH OF FEBRUARY 7, 2005 GUIDING THE CRITERIA, CONDITIONS AND PROCEDURES FOR APPOINTMENT AND REMOVAL OF, AS WELL AS ARRANGEMENT OF SALARIES FOR, CHIEF ACCOUNTANTS AND PERSONS IN CHARGE OF ACCOUNTANCY IN BUSINESS ORGANIZATIONS

In furtherance of Article 37 and Article 38 of the Government’s Decree No. 129/2004/ND-CP of May 31, 2004 detailing and guiding the implementation of a number of articles of the Accounting Law applicable to business activities, after consulting with the concerned ministries and branches, the Ministry of Finance and the Ministry of Labor, War Invalids and Social Affairs hereby jointly guide the criteria, conditions and procedures for appointment and removal of, and arrangement of salaries for, chief accountants and persons in charge of accountancy in business organizations as follows:

I. SUBJECTS OF APPLICATION

Subject to the application of this Circular are business organizations conducting accounting work as defined in Article 2 of the Government’s Decree No. 129/2004/ND-CP of May 31, 2004 (hereinafter called accounting units for short) which shall be specified as follows:

1. State companies operating under the Law on State Enterprises, including:

a/ State corporations (State corporations set up under the 1995 Law on State Enterprises and corporations invested and set up by the State under the 2003 Law on State Enterprises; corporations invested and set up by companies themselves; and State capital investment and trading corporations);

b/ Independent State companies;

c/ Independent cost-accounting member companies of corporations invested and set up by the State;

2. State companies operating under the Enterprise Law, including:

a/ State-owned joint-stock companies;

b/ State-owned one-member limited liability companies;

c/ State-owned limited liability companies with two or more members;

d/ Enterprises where the State holds dominant shares or contributes dominant capital;

e/ Enterprises with a State capital portion;

f/ State companies holding governing powers over other enterprises.

3. Organizations conducting business activities under the Enterprise Law, including:

a/ Limited liability companies;

b/ Joint-stock companies;

c/ Partnerships;

d/ Private enterprises.

4. Foreign-invested enterprises operating under the Law on Foreign Investment in Vietnam.

5. Branches of foreign enterprises operating in Vietnam.

6. Representative offices of foreign enterprises operating in Vietnam.

7. Cooperatives operating under the Law on Cooperatives.

8. Individual business households and cooperative groups.

II. ARRANGEMENT OF PERSONS TO WORK AS CHIEF ACCOUNTANTS OR PERSONS IN CHARGE OF ACCOUNTANCY, HIRING OF CHIEF ACCOUNTANTS

1. Accounting units

Accounting units are subjects defined in Section I of this Circular which conduct accounting work and make financial statements according to the provisions of the Accounting Law.

2. Arrangement of persons to work as chief accountants

Accounting units, which must arrange persons to work as chief accountants, include:

a/ Accounting units defined at Points 1, 2, 3, 4, 5 and 7, Section I of this Circular;

b/ Dependent cost-accounting companies of State corporations determined as accounting units;

c/ Parent companies and affiliate companies of corporations invested and set up by companies themselves, which are transformed after the parent company-affiliate company model;

d/ Business organizations with multi-level accountancy, if grassroots units are accounting units with big accounting work volume, there must be two or more accountants.

Particularly for special State enterprises in direct service of national defense and security under the Law on State Enterprises and the Government’s regulations, the arrangement of persons to work as chief accountants shall be prescribed by the Ministry of Defense, the Ministry of Public Security and the Government Cipher Committee for domains under their respective management after reaching agreement with the Ministry of Finance.

3. Arrangement of persons in charge of accountancy

Units and organizations allowed to arrange persons in charge of accountancy include:

a/ For accounting units defined at Point 2 above, if the post of chief accountant is vacant, the heads of accounting units must immediately arrange persons to work as chief accountants. In case of unavailability of persons who fully meet the criteria and conditions for being appointed chief accountants, they shall be allowed to appoint persons in charge of accountancy for a maximum duration of one fiscal year, then have to arrange persons to work as chief accountants.

b/ Business organizations defined at Point 6 and Point 8, Section I of this Circular are not compelled to arrange persons to work as chief accountants but must appoint persons to take charge of accountancy. Those who are arranged to take charge of accountancy in these cases may work in this position for unrestricted time.

4. Hiring of chief accountants

Accounting units, which are liable to arrange persons to work as chief accountants as prescribed at Point 2 above but fail to appoint chief accountants or persons in charge of accountancy, must hire chief accountants according to the provisions of Clause 2, Article 37 of Decree No. 129/2004/ND-CP.

5. Relationship between chief accountants or persons in charge of accountancy and heads and deputy-heads of accounting sections

a/ Accounting units which have already appointed chief accountants or persons in charge of accountancy shall not appoint heads of accounting sections or departments. Chief accountants or persons in charge of accountancy shall concurrently perform the tasks prescribed for heads of accounting sections or departments.

b/ In accounting units where financial and statistical work has not yet been separated, chief accountants or persons in charge of accountancy shall be also in charge of organizing and directing the financial and statistical work.

c/ Units with big accounting work volume may appoint chief accountants together with deputy-heads of accounting sections (departments). Deputy-heads of accounting sections (departments) shall act as assistants to chief accountants.

III. CRITERIA AND CONDITIONS FOR BEING APPOINTED CHIEF ACCOUNTANTS OR PERSONS IN CHARGE OF ACCOUNTANCY OR BEING HIRED TO WORK AS CHIEF ACCOUNTANTS

1. Criteria and conditions for being appointed chief accountants

a/ Criteria for being appointed chief accountants

- On ethics: Having professional ethical qualities, being honest and incorruptible, having a good sense of observing and protecting economic and financial principles, policies and regimes as well as the State’s law.

- On professional qualifications and skills:

+ Chief accountants of accounting units defined at Point 1, Point 2, Items a and b of Point 3 and Point 4, Section I of this Circular and chief accountants of affiliate companies must have professional accounting qualifications and skills of collegial, university or higher degree;

+ Chief accountants of accounting units defined at Items c and d of Point 3, Point 5, and Point 7, Section I of this Circular and chief accountants of dependent cost-accounting companies of corporations must have professional accounting qualifications and skills of intermediate or higher degree;

+ Chief accountants of superior-level accounting units with attached accounting sections, chief accountants of State corporations and chief accountants of parent companies must have professional accounting qualifications and skills of university or higher degree.

Particularly, chief accountants who are Vietnamese working for foreign-invested enterprises set up and operating in Vietnam must possess foreign-language skills as required by the enterprises in service of transaction and working requirements.

- On the duration of being actually engaged in accounting work:

+ Chief accountants of accounting units defined at Point 1 and Point 2, Items a and b of Point 3, and Point 4, Section I of this Circular and chief accountants of affiliate companies must have actually been engaged in accounting work for at least 2 years, provided that they acquire university degree; in cases where they have professional accounting qualifications and skills of collegial degree, they must have actually been engaged in accounting work for at least 3 years;

+ Chief accountants of accounting units defined at Items c and d of Point 3, Point 5, and Point 7, Section I of this Circular and chief accountants of dependent cost-accounting companies of corporations must have actually been engaged in accounting work for at least 3 years, provided that they have professional accounting qualifications and skills of intermediate degree; for persons with professional accounting qualifications and skills of university or higher degree, they must have actually been engaged in accounting work for at least 2 years;

+ Chief accountants of superior-level accounting units with attached accounting sections, chief accountants of State corporations and chief accountants of parent companies must have actually been engaged in accounting work for at least 5 years.

b/ Conditions for being appointed chief accountants

- Having met the criteria prescribed at Item a, Point 1, Section III of this Circular;

- Having obtained chief accountant-fostering certificates as prescribed in the Finance Minister’s Decision No. 43/2004/QD-BTC of April 26, 2004 or chief accountant-fostering certificates granted before the effective date of the Finance Minister’s Decision No. 43/2004/QD-BTC according to the provisions of the Regulation on fostering and granting certificates to chief accountants, issued together with the Finance Minister’s Decision No. 159 TC/CDKT of September 15, 1989 and Decision No. 769 TC/QD/TCCB of October 23, 1997.

- Not falling into the subjects banned from doing accounting work prescribed in Article 51 of the Accounting Law.

c/ Criteria and conditions for appointment of foreign chief accountants

Foreigners who are appointed chief accountants in foreign-invested enterprises or Vietnamese enterprises must have obtained accounting specialist’s certificates or accounting and audit certificates, issued by foreign organizations and recognized by Vietnam’s Finance Ministry; or accounting practice certificates or auditor’s certificates issued by Vietnam’s Finance Ministry; or chief accountant-fostering certificates as prescribed by the Finance Ministry; have actually been engaged in accounting work for at least 2 years including 1 year in Vietnam; not fall into subjects banned from doing accounting work as prescribed in Article 51 of the Accounting Law and be permitted to reside in Vietnam for one year or more.

2. Criteria and conditions for being appointed persons in charge of accountancy

Persons appointed to take charge of accountancy must fully meet the criteria on ethical qualities and professional qualifications and skills prescribed for chief accountants, but have not yet satisfied the conditions on duration of being actually engaged in accounting work or not yet obtained chief accountant-fostering certificates as prescribed at Item b, Point 1 above.

3. Criteria and conditions for persons hired to work as chief accountants

Persons hired to work as chief accountants must fully meet the following criteria and conditions:

a/ Possessing accounting practice certificates as prescribed in Article 57 of the Accounting Law or auditor’s certificates as prescribed in Article 13 of the Government’s Decree No. 105/2004/ND-CP of March 30, 2004 on independent audit;

b/ Possessing chief accountant-fostering certificates as prescribed by the Finance Ministry;

c/ Having registered accounting service business or registered accounting or audit practice in the accounting or auditing service enterprises as prescribed by law.

d/ Not falling into the subjects banned from doing accountancy work as prescribed in Article 51 of the Accounting Law.

IV. PROCEDURES FOR APPOINTMENT, REMOVAL AND REPLACEMENT OF CHIEF ACCOUNTANTS OR PERSONS IN CHARGE OF ACCOUNTANCY; HIRING OF CHIEF ACCOUNTANTS AND TERMINATION OF CONTRACTS WITH PERSONS HIRED TO WORK AS CHIEF ACCOUNTANTS

1. Procedures for appointment, removal and replacement of chief accountants or persons in charge of accountancy

a/ For State companies defined at Point 1, Section I of this Circular, when requesting the appointment, removal or replacement of chief accountants or persons in charge of accountancy, they must compile dossiers like the dossiers on appointment of deputy-directors or deputy-general directors, for chief accountants; or dossiers on appointment of heads of sections or departments, for persons in charge of accountancy and send them to competent authorities as prescribed in Clause 1, Article 25 and Clause 2, Article 40 of the Law on State Enterprises.

b/ For organizations defined at Point 2 and Point 3, Section I of this Circular, the appointment, removal or replacement of chief accountants or persons in charge of accountancy shall be prescribed as follows:

- For limited liability companies defined at Items b and c of Point 2 and Item a of Point 3, Section I of this Circular, such appointment, removal or replacement shall comply with the companies’ charters and be decided by the Members’ Councils according to the provisions of Point e, Clause 1, Article 35 of the Enterprise Law;

- For joint-stock companies defined at Items a, d, e and f of Point 2 and Item b of Point 3, Section I of this Circular, such appointment, removal or replacement shall comply with the provisions of Item f, Clause 2, Article 80 of the Enterprise Law and the companies’ charters and be decided by the Managing Boards;

- For partnerships defined at Item c of Point 3, Section I of this Circular, such appointment, removal or replacement shall comply with the companies’ charters and be decided by the Members’ Councils;

- For private enterprises defined at Item d, Point 3, Section I of this Circular, such appointment, removal or replacement shall be decided by enterprise owners;

c/ For foreign-invested enterprises and branches of foreign enterprises operating in Vietnam defined at Points 4 and 5, Section I of this Circular, the appointment, removal or replacement of chief accountants or persons in charge of accountancy is prescribed as follows:

- For enterprises with 100% foreign capital and branches of foreign enterprises, such appointment, removal or replacement shall be decided by investors;

- For joint-venture enterprises between Vietnamese and foreign parties, such appointment, removal or replacement shall be decided by their Managing Boards.

d/ For cooperatives defined at Point 7, Section I of this Circular, when requesting the appointment, removal or replacement of chief accountants or persons in charge of accountancy, they must comply with the provisions of Point b, Clause 1, Article 27 of the Law on Cooperatives and the appointment, removal or replacement thereof shall be decided by their Managing Boards.

e/ For representative offices of foreign enterprises operating in Vietnam, individual business households and cooperative groups defined at Points 6 and 8, Section I of this Circular and grassroots accounting units of business organizations with multi-level accountancy, the appointment, removal or replacement of persons in charge of accountancy or chief accountants (if any) shall be decided by representatives at law of such accounting units.

2. Procedures for signing and termination of contracts on hiring persons to work as chief accountants

a/ For enterprises and cooperatives being accounting units, which must arrange persons to work as chief accountants but fail to appoint, and hire them instead, the hiring of persons to work as chief accountants must be decided by authorities competent to appoint chief accountants as provided for at Point 1 above;

b/ Expenses for hiring persons to work as chief accountants shall be agreed upon in service contracts with accounting or auditing service enterprises or contracts signed directly with to-be-hired persons who have registered accounting service business.

c/ For enterprises and cooperatives being accounting units, which hire persons to work as chief accountants, if such persons breach contractual terms, the contracts shall be terminated. The procedures for termination of contracts on hiring persons to work as chief accountants shall be carried out similarly to procedures for signing contracts on hiring persons to work as chief accountants with accounting or auditing service enterprises or hired persons.

V. ARRANGEMENT OF SALARIES FOR CHIEF ACCOUNTANTS AND PERSONS IN CHARGE OF ACCOUNTANCY

1. For State companies defined at Point 1, Section I of this Circular, chief accountants shall enjoy position-based salaries arranged according to their companies’ grades as prescribed in the salary table applicable to general directors, directors, deputy general directors and chief accountants, issued together with the Government’s Decree No. 205/2004/ND-CP of December 14, 2004.

In cases where the above-said State companies appoint persons in charge of accountancy, such persons shall enjoy professional salaries and position allowances like heads of sections of enterprises of similar grades as prescribed in Item 6, Article 3 of the Government’s Decree No. 205/2004/ND-CP of December 14, 2004.

2. For business organizations defined at Points 2, 3, 4, 5 and 7, Section I of this Circular, salaries of chief accountants and persons in charge of accountancy shall be agreed upon by the involved parties and inscribed in labor contracts according to salary scales and tables decided by such enterprises or cooperatives.

3. For business organizations defined at Points 6 and 8, Section I of this Circular, which must arrange persons in charge of accountancy or chief accountants (if any), the salaries of persons in charge of accountancy or chief accountants shall be agreed upon by the involved parties and inscribed in labor contracts.

VI. IMPLEMENTATION ORGANIZATION

1. Accounting units have the responsibilities:

a/ To appoint those who fully meet the criteria and conditions to work as chief accountants or persons in charge of accountancy according to the provisions of Decree No. 129/2004/ND-CP and the guidance in this Circular;

b/ To comply with the procedures for appointment, removal and replacement of chief accountants or persons in charge of accountancy according to the provisions of this Circular;

c/ To decide on the hiring of chief accountants according to the provisions of this Circular.

2. Branch-managing ministries and provincial/municipal People’s Committees have the responsibilities:

a/ To direct and guide business organizations to scrutinize the contingent of chief accountants; to arrange and carry out procedures for the appointment, removal, replacement of, and the arrangement of salaries for, chief accountants or persons in charge of accountancy, and the hiring of persons to work as chief accountants in strict accordance with the State’s regulations;

b/ To coordinate with finance and accounting academies, universities and colleges and Vietnam Accounting and Audit Association in organizing chief accountant-fostering courses in service of the appointment of chief accountants.

c/ For accounting units being staffed with heads of accounting sections or departments, if such persons fully meet the prescribed criteria and conditions, they shall be appointed chief accountants; if not, they shall be shifted to work as persons in charge of accountancy.

3. The Finance Ministry has the responsibilities:

a/ To assume the prime responsibility for studying and guiding the criteria, conditions and procedures for the appointment, removal and replacement of chief accountants or persons in charge of accountancy as well as the hiring of persons to work as chief accountants according to the provisions of the Accounting Law;

b/ To coordinate with the Ministry of Labor, War Invalids and Social Affairs in inspecting the appointment, removal and replacement of, and arrangement of salaries for, chief accountants or persons in charge of accountancy as well as the hiring of persons to work as chief accountants in business organizations according to the provisions of this Circular.

VII. IMPLEMENTATION PROVISIONS

1. Branch-managing ministries and provincial/municipal People’s Committees shall, basing themselves on the provisions of this Circular, direct business organizations to appoint, remove and replace and arrange salaries for chief accountants or persons in charge of accountancy, and hire persons to work as chief accountants in strict accordance with the State’s regulations.

2. This Circular takes effect 15 days after its publication in the Official Gazette. To annul Circular No. 64-TT/LB of December 12, 1990 of the Ministry of Finance and the Ministry of Labor, War Invalids and Social Affairs guiding the appointment of, and arrangement of salaries for, chief accountants and deputy-chief accountants in State-owned factories.

Ministries, branches, localities and units are requested to report problems arising in the course of implementation to the Ministry of Finance and the Ministry of Labor, War Invalids and Social Affairs for consideration and settlement.

For the Minister of Finance

Vice Minister

LE THI BANG TAM

For the Minister of Labor, War Invalids and Social Affairs

Vice Minister

LE DUY DONG